S3132 —

      (1)  the legal name of the applicant, each current or proposed business address of the applicant, and any fictitious or trade name the applicant uses or plans to use in conducting its digital asset business activity with or on behalf of a resident;

      (2)  the legal name, any former or fictitious name, and the residential and business address of each executive officer and responsible individual of the applicant, and each controlling person of the applicant;

      (3)  a concise description of the current and former business of the applicant for the five years before the application is submitted or if the business has operated for less than five years, for the time the business has operated, including its products and services 2and the digital asset business services that the applicant seeks to provide in this State2;

      (4)  the name, address, and telephone number of a person who manages each server the applicant expects to use in conducting its digital asset business activity with or on behalf of a resident;

      (5)  a list of 2all other states in which the applicant is licensed to engage in the digital asset business and2 any license revocation, license suspension, or other disciplinary action taken against the licensee in another state and any license applications rejected by another state;

      (6)  a list of any criminal conviction, deferred prosecution agreement, and pending criminal proceeding in any jurisdiction against the applicant, any executive officer, responsible individual, and controlling person of the applicant, and each person over which the applicant has control;

      (7)  a list of any litigation, arbitration, or administrative proceeding in any jurisdiction in which the applicant, or an executive officer, responsible individual, or controlling person of the applicant has been a party to for the five years before the application is submitted, determined to be material in accordance with generally accepted accounting principles and, to the extent the applicant would be required to disclose the litigation, arbitration, or administrative proceeding in the applicant’s audited financial statements, reports to equity owners, and similar statements or reports;

      (8)  a list of any bankruptcy or receivership proceeding in any jurisdiction for the years prior to the application’s submission in which the applicant, any executive officer, responsible individual, or controlling person of the applicant, or person over which the applicant has control, was a debtor;

      (9)  the United 1[State] States1 Postal Service address and electronic mail address to which communications from the department may be sent;

      (10) the name, United 1[State] States1 Postal Service address, and electronic mail address of the registered agent of the applicant in this State, if applicable;

      (11) a copy of any certificate of coverage for each liability, casualty, business-interruption, or cyber-security insurance policy maintained by the applicant for itself or the applicant’s users;

      (12) 2a description of the structure or organization of the applicant, including any parent or subsidiary of the applicant, and whether any parent or subsidiary is publicly traded;

      (13)2  if applicable, the date on which and the state in which the applicant is formed, and a copy of a current certificate of good standing issued by that state;

      2[(13)] (14)2  policies and procedures to be adopted by the applicant to meet any obligations required by anti-money laundering and anti-terror financing laws;

      2[(14)] (15)  a copy of the applicant’s audited financial statements for the most recent fiscal year and, if available, for the two-year period next preceding the submission of the application;

      (16) a copy of the applicant’s unconsolidated financial statements for the current fiscal year, whether audited or not, and if available, for the two-year period next preceding the submission of the application;

      (17)2  if a corporation has control of the applicant and the corporation’s equity interests are publicly traded in the United States, a copy of the audited financial statement of the corporation for the most recent fiscal year or most recent report of the corporation filed under section 13 of the “Securities Exchange Act of 1934,” 15 U.S.C.

s.78m;

      2[(15)] (18)2  if a corporation has control of the applicant and the corporation’s equity interests are publicly traded outside the United States, a copy of the audited financial statement of the corporation for the most recent documentation similar to that required in paragraph 2[(14)] (17)2 of this subsection, filed with the foreign regulator in the domicile of the corporation;

2[and       (16)] (19)2 if available, for each executive officer, responsible individual, or controlling person of the applicant, for the three years before the application is submitted, the employment history, and the history of any 2[investigation of] enforcement action against2 the individual or legal proceeding to which the individual was a party 2;

      (20) a sample form of receipt for transactions that involve money received for the digital asset business;

      (21) disclosure of who maintains control, ownership or access to any private key related to a digital assets consumer’s account and information where the private key is held and the manner in which the private key is held;

and       (22) a list of all agents authorized to represent or conduct business on behalf of the digital asset business2 .

      c.   2At the time of application and within 45 days after the end of each calendar quarter, each digital asset business shall file with the department in writing a list of all agents that have been added or terminated by the licensee, if any.

The list shall include the name and business address of each location.

      d.

The department may conduct a criminal history records check of the applicant, any controlling persons, executive officers, and responsible individuals of the applicant and require the applicant to submit the fingerprints of those persons as part of the application.

The department is authorized to exchange fingerprint data with and receive criminal history record information from the State Bureau of Identification in the Division of State Police and the Federal Bureau of Investigation consistent with applicable State and federal laws, rules and regulations, for the purposes of facilitating determinations concerning licensure eligibility for the applicant, any controlling persons, executive officers, and responsible individuals of the applicant.

The applicant shall bear the cost for the criminal history record background check, including all costs of administering and processing the check.

The Division of State Police shall promptly notify the department in the event any person who was the subject of a criminal history record background check pursuant to this section, is arrested for a crime or offense in this State after the date the background check was performed, whether the person is a prospective new licensee, or subsequently, a current license holder.

     e.2  1[For good cause, the department may waive any information required pursuant to subsection b.

of this section, and may permit an applicant to submit other information instead of the required information.] No license shall be issued by the department to an individual who has, within the five years preceding the submission of an application for a license, been convicted of embezzlement, forgery, fraud, or theft.1        2[5.  A person licensed by another state to engage in digital asset business activity in that state may engage in digital asset business activity with or on behalf of a resident to the same extent as a licensee if:

     (1)   the department determines that the state in which the person is licensed has in force laws regulating digital asset business activity that are substantially similar to, or more protective of users than, this act;

and      (2)   the person submits to the department 1through the Nationwide Multistate Licensing System1:

     (a)   a notice containing a statement that the person will rely on reciprocal licensing;

a copy of the license to conduct digital asset business activity issued by the other state;

     (b)   a nonrefundable reciprocal license fee, to be determined by the department by regulation;

     (c)   a certification of license history from the agency responsible for issuing the license to conduct digital asset business activity in the other state;

and      (d)   a certification signed by the executive officer of the applicant affirming that the applicant shall conduct its digital asset business activity with or on behalf of a resident in compliance with this act.]2        2[6.] 5.2     a.  The department shall grant or deny any digital asset business license application 2[or license reciprocity application]2 within 2[30] 1202 days of 2[its receipt] completed application2.

     b.    The department may refuse an application for a digital asset business license or license reciprocity application if:

     (1)   the application is incomplete in a material respect;

     (2)   the application includes false, misleading, or inaccurate information;

2[or]2      (3)   any applicant 2[or principal] , controlling person, key individual, or responsible individual2 of an applicant has engaged in dishonest or unethical practices in a digital asset business or in the securities commodities, banking, insurance, or investment advisory business2;

or      (4)  Any material aspect of the license application as represented by the application requirements contained in section 4 of this act2.

     c.     A license issued pursuant to this act shall not be transferrable or assignable.

       2[7.] 6.2     a.  A licensee may apply for an annual renewal of a license by:

     (1)   paying a renewal fee in an amount determined by the department pursuant to regulation;

     (2)   submitting to the department 1through the Nationwide Multistate Licensing System1 the renewal report required pursuant to subsection b.

of this section.

     b.    A license renewal report required pursuant to this section shall be submitted in a form and medium prescribed by the department by regulation.  The report shall contain an update of all information required at initial licensing and a description of any:

     (1)   material change in the financial condition of the licensee;

     (2)   material litigation involving the licensee or an executive officer, responsible individual, or controlling person of the licensee;

     (3)   license suspension or revocation proceeding commenced, or other action taken, involving a license to conduct digital asset business activity issued by another state on which reciprocal licensing is based;

     (4)   federal or state 2[investigation] action2 involving the licensee;

     (5)   material change in the business of the licensee;

and      (6)   changes to the executive officers of the licensee.

     c.     2[The department shall send the licensee a notice that an annual renewal is soon to be due.  The notice shall be sent by regular mail and electronic mail between 30 and 60 days before the annual renewal is due.  If a renewal is not filed within 15 days of the date that the annual renewal is due, the department shall send a second notice by regular mail and electronic mail notifying that licensee that its license shall be suspended if a renewal is not filed by the 30th day after the annual renewal is due.

     d.]2  If a license is suspended for failure to file an annual renewal, the license shall be reinstated if the licensee files a renewal report and pays a fee, in an amount determined by the 2[commissioner] department2 pursuant to regulation.

       2[8.] 7.2     a.  2[The department may audit any digital asset business licensee.

     b.]2  The department may suspend or revoke a digital asset business license upon finding that:

     (1)   the department has been provided with false, misleading, or inaccurate information by or on behalf of the licensee;

     (2)   the clients of a licensee have been provided with false, misleading, or inaccurate information by or on behalf of the licensee;

     (3)   any 2[principal] controlling person, responsible individual, key individual,2 or agent of a licensee has engaged in dishonest or unethical practice in a digital asset business or in the securities, commodities, banking, insurance, or investment advisory business;

     (4)   the licensee fails to provide documents requested by the department;

2[or]2      (5)   the licensee fails to renew its license2;

or      (6)   the licensee fails safety and soundness as prescribed by the department2 .

     c.     The department may provide a warning notice to a licensee if the department suspects that a condition permitting suspension or revocation has occurred.

     d.    Any warning notice, suspension, or revocation issued by the department shall state the reasons for which it is given.

     e.     The department may issue general guidance to industry participants on how to best protect the interests of clients.

     2f.   (1)  Whenever it appears to the department that any person has violated, is violating or is about to violate any of the provisions of this act, or any regulation adopted pursuant to this act, or any licensee or any owner, director, officer, member, partner, shareholder, trustee, employee or agent of a licensee has committed any fraud, engaged in dishonest activities or made any misrepresentation, the department may bring a civil suit in a court of competent jurisdiction to enjoin the violation or potential violation, seek civil penalties pursuant to paragraph (2) of this subsection, or both.

     (2)   Any person who violates any provision of this act shall be liable, in a civil action brought by the department in a court of competent jurisdiction, for a penalty of not more than $10,000 for the first violation, and $20,000 for the second and each subsequent offense.  The penalty shall be paid to the department to be used in accordance with this act and shall be collected pursuant to the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).  The court shall also award court costs and reasonable attorneys' fees to the department.

     g.    Each licensee shall maintain and enforce confidential, written compliance policies, including policies with respect to anti-fraud, anti-money laundering, cyber security, privacy and information security, which shall be reviewed and approved by the licensee’s board of directors or an equivalent governing body.2        2[9.] 8.2     Any denial, suspension, or revocation of a license, or warning notice issued by the department shall prominently indicate that a right of appeal is available.  A licensee or prospective licensee which is aggrieved by a decision of the department may appeal the decision by filing a request for a hearing before the Office of Administrative Law.

       2[10.] 9.2  a.  (1)  A licensee shall provide to the department in a reasonable amount of time any document relating to the operations of the licensee upon receiving a written request from the department.

     (2)   Any notice requiring the production of documents pursuant to this section shall include the reasons for which it is given.

     b.    A licensee shall give written notice to the department within five days if there are any changes in the identities of the licensee’s executive officers, responsible individuals, or controlling persons.

     c.     A 1[license] licensee1 shall maintain a record of all client transactions for a period of not less than 1[one year] six years1 from the date the transaction occurred.

       2[11.] 10.2 a.  The terms and conditions of a digital asset business involving a consumer’s account shall be disclosed 2as part of establishing a relationship with a customer and prior to entering into an initial transaction with the customer2 at the time the consumer contracts for a digital asset business service.  A disclosure shall be full and complete, contain no material misrepresentations, be in readily understandable language and may include, as appropriate and to the extent applicable:

     (1)   a schedule of fees and charges the licensee may assess, the manner by which fees and charges will be calculated if they are not set in advance and disclosed, and the timing of the fees and charges;

     (2)   whether a consumer’s account is protected by the Federal Deposit Insurance Corporation;

     (3)   whether there is support for forked networks of each digital asset;

     (4)  that investment in digital assets is volatile and subject to market loss;

     (5)   that investment in digital assets may result in total loss of value;

     (6)   that legal, legislative and regulatory changes may impair the value of digital assets;

     (7)   that consumers should perform research before investing in digital assets;

     (8)   that transfers of digital assets are irrevocable, if applicable;

     (9)   how liability for an unauthorized, mistaken or accidental transfer shall be apportioned;

     (10)  that digital assets are not legal tender in any jurisdiction;

     (11)  that digital assets may be subject to cyber theft or theft and become unrecoverable;

     2[(12) who maintains control, ownership and/or access to any private key related to a digital assets consumer’s account;

     (13)] (12)2 that losing private key information may result in permanent total loss of access to digital assets;

     2[(14)] (13)2 under what circumstances the digital asset business will in the ordinary course of business disclose information concerning the consumer’s account to third parties;

and      2[(15)] (14)2 any other material investment risks.

      b.   All disclosures required by this act shall be displayed and individually agreed to by a consumer before any digital asset transaction at an electronic kiosk.  Any fee to be charged shall be displayed and individually agreed to by a consumer before any digital asset transaction or digital asset balance inquiry at an electronic kiosk.

     c.     A licensee 2[or registrant]2 that has custody of digital assets for one or more persons shall maintain in its custody an amount of each type of digital assets sufficient to satisfy the aggregate entitlements of the persons to the type of digital asset.

     d.    2Each licensee shall establish and maintain written policies and procedures to fairly and timely resolve customer complaints.

     e.     Each licensee shall provide, in a clear and conspicuous manner, on its website or websites, and in all physical locations the following disclosures:

     (1)   the licensee’s mailing address, e-mail address, and telephone number for the receipt of complaints;

     (2)   a statement that the complainant may also bring a complaint to the attention of the department;

and      (3)   the department’s mailing address, website, and telephone number.

     f.2   The department may audit a licensee’s compliance with this section.

       211.    Authority of department.

     a.     The department shall have the authority to conduct investigations and examinations as follows:

     (1)   for purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation to determine compliance with this act, the department may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to:

     (a)   criminal, civil and administrative history information;

     (b)   financial statements and any other records of financial condition of the licensee, any control person of the licensee, and any business entity exerting control over the licensee;

     (c)   personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in section 603(p) of the “Fair Credit Reporting Act” 3[(15 U.S.C.

s.1681a(p))] U.S.C.

s.1681a(p)3;

and      (d)   any other documents, information or evidence the department deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of the documents, information or evidence;

and      (2)   for the purposes of investigating violations or complaints arising under this act, or for the purposes of examination, the department may review, investigate, or examine any digital asset business licensee or person subject to this act as often as necessary in order to carry out the purposes of this act.

The commissioner may direct, subpoena, or order the attendance of and examine under oath all persons whose testimony may be required about digital assets, digital consumer assets, virtual currency or the business or subject matter of any examination or investigation, and may direct, subpoena or order the person to produce books, accounts, records, files and any other documents the department deems relevant to the inquiry.

     b.    A digital asset business licensee or any person subject to this act shall make or compile reports or prepare other information as directed by the department in order to carry out the purposes of this section including accounting compilations, information lists and data concerning digital asset, digital consumer asset, or virtual currency transactions in a format prescribed by the commissioner or any other information the department deems necessary to carry out the purposes of this act.

     c.     In making an examination or investigation authorized by this section, the department may control access to any documents and records of the digital asset business or person under examination or investigation.

The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept.

During the period of control, no person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the department.

Unless the commissioner has reasonable grounds to believe the documents or records of the digital asset business or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of this act, the digital asset business or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.

     d.    For purposes of conducting the authority of the department, addition of required resources as follows:

4 examiners, 2 licensing investigators and 2 enforcement investigators.2        212.  a.  Notwithstanding any other provision of law, all information or reports obtained by the department from an applicant, licensee or agent, whether obtained through reports, applications, examinations, audits, investigations, or otherwise, including, but not limited to:

(1) all information contained in or related to examination, investigation, operating, or condition reports prepared by, or on behalf of, or for the use of the department;

or (2) financial statements, balance sheets, or authorized delegate information, are confidential and may not be disclosed or distributed outside the department by the department or any officer or employee of the department.  The department, however, may provide for the release of information to representatives of state or federal agencies and foreign countries having regulatory or supervisory authority over the activities of the licensee or similar licensees if those representatives, upon request of the commissioner, disclose similar information respecting those licensees under their regulation or supervision, or to those representatives who state in writing under oath that they shall maintain the confidentiality of that information.

     b.    The department may:

     (1)   disclose the fact of filing of applications with the department pursuant to this act, give notice of a hearing, if any, regarding those applications, and announce an action thereon;

     (2)   disclose final decisions in connection with proceedings for the suspension or revocation of licenses issued pursuant to this act;

     (3)   prepare and circulate reports reflecting the assets and liabilities of digital asset businesses in general, including other information considered pertinent to the purpose of each report for general statistical information;

and      (4)   prepare and circulate reports as provided by law.

     c.     Every official report of the department is prima facie evidence of the facts therein stated in any action or proceeding wherein the department is a party.

     d.    Nothing in this section shall be construed to prevent the disclosure of information that is admissible in evidence in any civil or criminal proceeding brought by or at the request of the department or this State to enforce or prosecute violations of this act or the rules, regulations or orders issued or promulgated pursuant to this act.2      213.  Section 2 of P.L.2005, c.199 (C.17:1C-34) is amended to read as follows:

     2.    For the purposes of this act:

     "Assessment" means the assessment imposed pursuant to section 3 of this act for the special functions of the division as provided in that section.

     "Commissioner" means the Commissioner of Banking and Insurance.

     "Department" means the Department of Banking and Insurance.

     "Depository institution" means any entity holding a state charter for a bank, savings bank, savings and loan association or credit union, irrespective of whether the entity accepts deposits.

     "Division" means the Division of Banking in the Department of Banking and Insurance.

     ["Nationwide Mortgage Licensing System and Registry" means the mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, or their successors, and utilized in this State pursuant to the provisions of the "New Jersey Residential Mortgage Lending Act," sections 1 through 39 of P.L.2009, c.53 (C.17:11C-51 et seq.).]      "Nationwide Multistate Licensing System” means the licensing system owned and operated by the State Regulatory Registry, LLC, a wholly-owned subsidiary of the Conference of State Bank Supervisors, which functions as a system of record for non-depository, financial services licensing or registration in participating state agencies, including the District of Columbia and the United States Territories of Puerto Rico, the US Virgin Islands, and Guam, where it is the official system for companies and individuals seeking to apply for, amend, renew, and surrender license authorities.

     "Other financial entity" means a person who is licensed or registered pursuant to:  the "New Jersey Consumer Finance Licensing Act," sections 1 through 49 of P.L.1996, c.157 (C.17:11C-1 et seq.);

the "New Jersey Residential Mortgage Lending Act," sections 1 through 39 of P.L.2009, c.53 (C.17:11C-51 et seq.), other than a financial entity with respect to the payment of required fees to the Nationwide [Mortgage] Multistate Licensing System [and Registry] as set forth by that nationwide system and registry;

"The Check Cashers Regulatory Act of 1993," P.L.1993, c.383 (C.17:15A-30 et seq.);

the "New Jersey Money Transmitters Act," P.L.1998, c.14 (C.17:15C-1 et seq.);

the "Insurance Premium Finance Company Act," P.L.1968, c.221 (C.17:16D-1 et seq.);

the "Retail Installment Sales Act of 1960," P.L.1960, c.40 (C.17:16C-1 et seq.);

the "Door-to-Door Retail Installment Sales Act of 1968," P.L.1968, c.223 (C.17:16C-61.1 et seq.);

the "Home Repair Financing Act," P.L.1960, c.41 (C.17:16C-62 et seq.);

the "Door-to-Door Home Repair Sales Act of 1968," P.L.1968, c.224 (C.17:16C-95 et seq.);

P.L.1979, c.16 (C.17:16G-1 et seq.);

the "Foreclosure Rescue Fraud Prevention Act," P.L.2011, c.146 (C.46:10B-53 et al.); the “Mortgage Servicers Licensing Act,” P.L.2019, c.65 (C.17:16F-27 et al.);

the provisions of P.L.2019, c.200 (C.17:16ZZ-1 et al.);

or the "pawnbroking law," R.S.45:22-1 et seq;

or the “Digital Asset and Blockchain Technology Act” P.L.    , c.   (C.        ) (pending before the Legislature as this bill).

     "Regulated entity" means a depository institution, other financial entity or person chartered, licensed or registered by the Division of Banking or who should be chartered, licensed or registered.2 (cf:

P.L.2019, c.200, s.17)        1[12.  a.  Gross income shall not include up to $1,000 of gains or income from the sale or exchange of digital assets for other than legal tender, except that following the first taxable year that this section is in effect, the $1,000 limit shall be increased annually by $50.

     b.    Gross income shall not include up to $250 of dividend distributions in the form of digital assets arising from the ownership of digital assets, except that following the first taxable year that this section is in effect, the $250 limit shall be increased annually by $20.       c.     As used in this section “digital asset” shall mean the same as that term is defined pursuant to section of P.L.     , c.   (C.          ) (pending before the Legislature as this bill).]1         2[1[13.] 12.1] 14.2  This act shall take effect on the first day of the 2[fourth] sixth2 month next following enactment, except the commissioner may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act.